Newsletter – August 18 2017

Newsletter – August 18 2017

“In 1987, the state government of New South Wales, the cabinet, sat down to consider bids for Sydney’s very first casino.

What happened, there were a number of bidders but as those ministers from a labor government sat down to consider it…

They actually spotted, perhaps even forgotten now – one name – and that was Donald J. Trump…

He was 41 years old but the New South Wales cabinet, when they came to consider his bid for a casino in Sydney, rejected it and that’s where the story gets rather interesting”Full interview here

Week That Was…

The Commonwealth Bank’s annual report was revealed on Monday and it held quite a few surprising announcements.

Firstly, current Chief Executive Ian Narev will step down at the end of the 2018 financial year, or sooner if a replacement is found.

The other aspect is that he had his pay slashed quite significantly last year.

This is not surprising considering the Commonwealth Bank has gone through quite an amount of turmoil and investigation the last couple of years.

Especially now with AUSTRAC accusing the bank of 53,000 breaches of money laundering and financing of terrorism.

So, back to Narev’s pay – now, when I say a pay cut, I mean he is still earning a very significant amount. He earned $5.5 million last year. But it could’ve been a lot more…

If you consider his base pay $2.65 million, and on top of that he also gets cash and shares and a long term incentive of another $2.85 million.

We already know $4.82 million of short term bonuses was forfeited last week by the Bank’s chairman Catherine Livingstone.

So, if you do add $5.5 million and $4. 82 million together, you certainly come up with a number of more than $10 million – that Ian Narev otherwise might have been paid had it been a smooth sailing year for the Commonwealth Bank.

Over the course of Ian Narev’s six years as the top boss of the Commonwealth Bank, he has earned a staggering $45 million – so I would say this pay cut didn’t hurt him too deeply, but enough to appease the shareholders.

But it is funny that this all comes out, his pay cut and when he will step down, so soon after the AUSTRAC allegation…wouldn’t you agree?

The chairman of the Bank painted the impending departure of the chief executive as business as usual.

Catherine Livingstone says “Nothing has changed. We have full confidence in Ian as CEO”

But of course plenty has changed. It’s not every day you are accused over 53,000 breaches, now is it?

One of the largest shareholders in the Commonwealth Bank, certainly one of the largest individual shareholders, is Barry Lambert.

Barry thinks Ian Narev is getting exactly what he deserves…

Barry says “I think it’s appropriate, obviously he’s been there for some time. In many respects he’s done a great job. You look at the performance of the bank… However there’s been some issues that haven’t been handled well…There’s got to be some criticism of the organization and there is of course.

And the CEO usually takes responsibility for that. If he can’t fix it, then he should be taken responsibility.

I think the exits appropriate…”

You’ve got the largest individual shareholder of the bank saying the Chief Executive should take responsibility…is someone listening to the shareholders?

Clearly.

Finally, I’ve told you all a number of times about Australia’s stagnant wages growth.

And it turns out we have the lowest levels of wages growth in two decades, with wages increasing only 1.9 percent since last year.

Considering this was the same increase that was recorded for the three months to March, and only just matches the current level of cost living increases…no wonder household budgets and disposable income are becoming tighter and tighter.

This lower-than-expected number also means the Turnbull government is now barely keeping up with its budget forecast of a 2 per cent wage rise, a figure it is banking on to return to surplus by 2020-21.

Will it get there, we will just have to wait and see.

9News –

Ian Narev pay gets slashed and his retirement is sooner than expected…should we be shocked? – Watch Here

Money News –

Domino’s Pizza released their results and investors were not happy. However, Chief Executive Don Meij says good things are coming their way – Listen Here

Work. Life. Money –

Jimmy Barnes’ brother and the man who owned Billy Joel’s famous Harmonica – I speak to John Swan, the rocker. – Listen Here from Sunday

About The Author

Ross Greenwood is the Nine Network’s business and finance editor, and hosts Sydney's top-rating radio program, Money News, for 2GB, 4BC. 3AW and all networked stations across the Macquarie Media group.
He appears daily on the Today Show - notably for his Money Minute - and Nine News.